DoD's $32.6M Northrop Grumman Contract for Electronic Components: A Cost-Plus Fixed Fee Award
Contract Overview
Contract Amount: $32,654,968 ($32.7M)
Contractor: Northrop Grumman Systems Corporation
Awarding Agency: Department of Defense
Start Date: 2005-04-11
End Date: 2013-07-31
Contract Duration: 3,033 days
Daily Burn Rate: $10.8K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: COST PLUS FIXED FEE
Sector: Other
Place of Performance
Location: LINTHICUM HEIGHTS, ANNE ARUNDEL County, MARYLAND, 21090
State: Maryland Government Spending
Plain-Language Summary
Department of Defense obligated $32.7 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: Key points: 1. Significant contract value of $32.6 million awarded to a major defense contractor. 2. Awarded under a 'NOT COMPETED' category, indicating limited or no prior competition. 3. The contract spans nearly 8 years, suggesting a long-term need for these components. 4. Risk of inflated costs due to the Cost Plus Fixed Fee (CPFF) pricing structure. 5. The sector is 'Other Electronic Component Manufacturing', a critical but often opaque area.
Value Assessment
Rating: questionable
The Cost Plus Fixed Fee (CPFF) structure can incentivize higher costs as the contractor is reimbursed for expenses plus a fixed fee. Without competitive benchmarking, it's difficult to ascertain if the $32.6 million represents fair value for the components provided.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
The contract was explicitly 'NOT COMPETED', indicating a sole-source award. This lack of competition limits price discovery and potentially leads to higher costs for the government compared to a competitive bidding process.
Taxpayer Impact: The absence of competition may result in taxpayers paying a premium for these electronic components, as cost efficiencies driven by market forces were not leveraged.
Public Impact
Taxpayers may be overpaying for critical electronic components due to the lack of competition. The long duration of the contract raises questions about the government's ability to adapt to technological advancements or seek better pricing over time. Transparency in the cost breakdown for this sole-source contract is crucial for accountability.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award limits competition and price discovery.
- Cost-Plus Fixed Fee (CPFF) pricing can lead to cost overruns.
- Long contract duration (8 years) may not reflect current market value.
- Lack of specific product details makes independent cost assessment difficult.
Positive Signals
- Award to a known, established defense contractor (Northrop Grumman).
- Contract addresses a specific need within the Department of Defense.
- Fixed fee component provides some cost predictability for the contractor's profit.
Sector Analysis
The 'Other Electronic Component Manufacturing' sector is vital for defense systems, but often involves proprietary technologies and complex supply chains. Benchmarking costs can be challenging due to the specialized nature of components and limited public data.
Small Business Impact
This contract was awarded to Northrop Grumman Systems Corporation, a large prime contractor. There is no indication of small business participation or subcontracting in the provided data.
Oversight & Accountability
The 'NOT COMPETED' status suggests a potential gap in competitive sourcing strategies. Further oversight is needed to ensure justification for sole-source awards and to explore opportunities for future competition or alternative sourcing.
Related Government Programs
- Other Electronic Component Manufacturing
- Department of Defense Contracting
- Defense Contract Management Agency Programs
Risk Flags
- Lack of Competition
- Cost-Plus Pricing Risk
- Long Contract Duration
- Limited Transparency on Components
- Potential for Cost Overruns
Tags
other-electronic-component-manufacturing, department-of-defense, md, definitive-contract, 10m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $32.7 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. See the official description on USAspending.
Who is the contractor on this award?
The obligated recipient is NORTHROP GRUMMAN SYSTEMS CORPORATION.
Which agency awarded this contract?
Awarding agency: Department of Defense (Defense Contract Management Agency).
What is the total obligated amount?
The obligated amount is $32.7 million.
What is the period of performance?
Start: 2005-04-11. End: 2013-07-31.
What specific electronic components were procured under this contract, and how were their prices determined without competition?
The provided data does not specify the exact electronic components. However, under a Cost Plus Fixed Fee (CPFF) contract, the government reimburses the contractor for allowable costs plus a predetermined fixed fee. Price determination relies heavily on the contractor's cost proposals and the government's negotiation and oversight capabilities, which are inherently less robust in sole-source situations.
What is the risk associated with the Cost Plus Fixed Fee (CPFF) structure in this sole-source context?
The primary risk of CPFF in a sole-source award is the potential for inflated costs. Since the contractor is guaranteed reimbursement for expenses and a fixed profit, there is less incentive to control costs aggressively. Without competition, the government lacks a market benchmark to validate the reasonableness of the incurred costs.
How effective is this contract in ensuring the Department of Defense receives value for taxpayer money?
The effectiveness in ensuring value is questionable due to the sole-source nature and CPFF structure. While the contract fulfills a specific need, the lack of competition and potential for cost inefficiencies suggest that taxpayers may not be receiving optimal value. Robust government oversight and negotiation are critical to mitigate these risks.
Industry Classification
NAICS: Manufacturing › Semiconductor and Other Electronic Component Manufacturing › Other Electronic Component Manufacturing
Product/Service Code: INSTRUMENTS AND LABORATORY EQPT
Competition & Pricing
Extent Competed: NOT COMPETED
Solicitation Procedures: ONLY ONE SOURCE
Offers Received: 1
Pricing Type: COST PLUS FIXED FEE (U)
Evaluated Preference: NONE
Contractor Details
Parent Company: Northrop Grumman Corporation (UEI: 967356127)
Address: 1580A NURSERY RD, LINTHICUM HEIG, MD, 21090
Business Categories: Category Business, Not Designated a Small Business
Contract Characteristics
Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED
Cost or Pricing Data: YES
Timeline
Start Date: 2005-04-11
Current End Date: 2013-07-31
Potential End Date: 2013-07-31 00:00:00
Last Modified: 2018-03-15
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